Riot Platforms' stock surged over 20% after announcing a $9.1 billion AI computing deal with Anthropic, marking a strategic shift from bitcoin mining.
Riot Platforms (RIOT) experienced a remarkable increase of over 20% in pre-market trading on Tuesday, following the announcement of a substantial $9.1 billion contract with AI research lab Anthropic. This deal signifies a major pivot in Riot's business strategy, transitioning from traditional bitcoin mining to the burgeoning field of artificial intelligence.
Key Details of the Agreement
The 20-year contract allocates 191 megawatts of computing power from Riot's facility in Rockdale, Texas, to Anthropic. Analysts observe that this move aligns with a growing trend in the industry, as miners seek more stable revenue sources beyond the volatility of bitcoin mining.
Riot's existing infrastructure provides a competitive edge, allowing it to quickly meet the demands of AI clients, contrasting with newcomers who must build from the ground up. Recently, Anthropic also secured a separate six-year, $10 billion deal with Volta Infra for computing resources in Norway, illustrating the high demand for AI processing power.
Operations at Riot's Rockdale site are slated to begin in December 2027, with full operational capacity expected by June 2028. The contract includes options for two five-year extensions, potentially increasing the total value to $16.1 billion. Riot anticipates that the initial term will generate between $7.3 billion and $8.2 billion in net operating income.
Shift in Revenue Streams
This agreement follows Riot's previous lease with Advanced Micro Devices (AMD), boosting its total contracted AI capacity at Rockdale to 241 megawatts. In the second quarter, Riot reported a 14% revenue increase, totaling $174.2 million, with $23.2 million coming from data center operations. However, bitcoin mining revenue fell to $113.7 million due to lower bitcoin prices and rising competition.
To fund its data center initiatives, Riot has been selling its monthly bitcoin production and reducing its bitcoin holdings, which have dropped from 15,680 bitcoins to 11,380 in the last quarter. This shift highlights the challenges faced by miners as they adapt to changing market conditions.
While Riot is making strides in the AI sector, other AI-focused miners like Cipher Mining and TeraWulf have struggled, with stock prices plummeting over 40% from their highs, reflecting the ongoing volatility in the AI market.
